The answer can be found in the case law and Constitutional history, says Sheppard, who is the Enfield Professor Law at the University of Arkansas. The 14th Amendment allows the president to pay bonds already authorized, he says, even if Congress gives no further authorization.
Sheppard says Obama may even be able to allow the Treasury to issue as many new bonds as it buys back. The president cannot, however, order the sale of more bonds than already allowed, which would reduce revenue from debt until the ceiling is reached but avoid default on any bonds that mature.
“There are plenty of people who would disagree with this,” Sheppard says, “but I think it best explains the history during Reconstruction amendments to the Constitution, in the light of Chief Justice Hughes’ opinion in 1935.”
Sheppard recognizes that any unilateral action by the president to spend money without congressional authority would almost certainly lead to a federal court case, and House Republicans might attempt to impeach him.
“A lawsuit would drag on, but the courts would not interfere with the power of the president to pay the national debt,” he says. “Under a long-standing doctrine called justiciability, such suits would be dismissed. As for impeachment, even if a majority of the House were willing to set such a precedent, the Senate would never accept it.”
Rather than a threat to the Constitution, the greater danger to the United States is a loss of reputation internationally, Sheppard says. And that reputation is worth a lot of money.
“The real problem is the Tea Party,” he says. “There is no evidence that members of Congress who follow it understand how the U.S. economy works. If the world’s investors think the federal budget and the U.S. dollar are hostage to those who subscribe to the ideas of Grover Norquist, that will really hurt our credit, and if the credit rating of the United States takes a hit because investors stop accepting the full faith and credit of the United States, we will have to raise trillions more in taxes. And if these investors believe we’d rather have the lowest taxes in the Western world than to feed widows and orphans or build roads or fund tomorrow’s patent research, we could go down the credit-rating tubes fast.”
Sheppard has written an article on the purposes of Congress in the 14th Amendment, as well as I Do Solemnly Swear: The Moral Obligations of Legal Officials (Cambridge University Press). His newest book, The Bouvier Law Dictionary, will be published in August.
Sheppard may be reached at 479-575-7127 or [email protected]. His faculty website is http://law.uark.edu/faculty-staff/faculty-biography.html?user=sheppard.
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